Dynamic aspects of family transfers

TitleDynamic aspects of family transfers
Publication TypeJournal Article
Year of Publication2016
AuthorsMcGarry, KM
JournalJournal of Public Economics
Pagination1 - 13
Date PublishedJan-05-2016
ISSN Number00472727
KeywordsAdult children, Divorce, Job loss, Marriage, Older Adults

Parents transfer a great deal to their adult children, and we have rich theoretical models providing a framework for these transfers. However, both the models and existing empirical work typically examine behavior in the cross section. To date, we know little about the dynamic aspects of family transfers. Here I examine transfers over a span of 17 years and find substantial changes in recipiency over time and a strong negative correlation between transfers and transitory income. I also find that events such as job loss and divorce are strong predictors of parental transfers and, although rare, are typically associated with larger transfers than income alone might predict. Finally, transfers are distributed unequally across siblings, and perhaps surprisingly, the distribution of transfers becomes even more unequal when examined over an extended period of time than in any single year. The evidence presented here thus suggests that dynamic analyses can provide insights into behavior that are impossible to obtain in a static context.

Short TitleJournal of Public Economics
Citation Key8932